Over the past 2 years, we have seen a dramatic increase in the average priced paid for gasoline in the America. In fact, as shown in the graph above, on January 3, 2009 (exactly 2 years ago), gas prices were in around $1.65/gallon. Now? We’re over $3.00/gallon! So here’s the question: who controls gas prices?

Supply and Demand

To be honest, the question “who controls gas prices?” may not actually be the right one. It’s no so much “who” but “what” controls gas prices. Our US government isn’t responsible for putting price tags on the gas pumps; believe it or not, Chevron, Shell, BP, and other gas stations don’t have as much control over prices as you might think.

Certainly supply and demand play a role in pricing all products–oil is no different. Simple economics states that as demand increases, prices increases (assuming supply doesn’t move); additionally, if supply decreases and demand stays the same, price will also increase.

So are those factors at play here?

China, India, and World Oil Needs

So who controls gas price? Well–many in the media are citing China, India, and other expanding economies at a large reason for increasing gas prices. Why? Because of these countries economic expansion, many say that they are the reason for increased demand. And, again, as mentioned above, an increase in demand often leads to an increase in prices, assuming an increase in supply doesn’t follow.

BUT–listen to this: according to an article in BusinessWeek, this argument pinning rising prices on China and India could be false. Read this quote:

In 2008, China was importing 3.671 million barrels of oil per day, and that figure jumped to 4.096 million barrels in 2009. Through the first 10 months of 2010, China imported 4.74 million barrels per day. U.S. importation of oil, on the other hand, dropped from 10.1 million bpd in 2005 to just 9.1 million bpd in 2010. And in the last 90 days, we’ve imported only an average 8.55 million bpd. True, Chinese demand for oil is up by 1 million barrels per day, but U.S. demand for imported oil has fallen nearly an identical amount over a slightly longer period of time.

So, yes, demand in places like China is increasing; however, with the decrease in oil needs within other countries (like the US), should that really be why gas is rising? Who controls gas prices?

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Who Controls Gas Prices?

For more information about who controls gas prices and why they are increasing, consider the following articles:

3 Responses to “Who Controls Gas Prices?”

it is controlled by world bank . gas is sold to thme at wholeesale and sels it to gas companies. why is it so high.. isnt it just right under our noses..?? its the failing usa economy. it s the collapse of the past years . ! the collapse of the houusing market, ponzi schemes like enron, a lot of other big companies who cheated the peiople and cashed in. cause u know what the world bank is really controlled by the usa. their headquarters is in new york headed by that allege rapist strauss kahn ! the govt is simply trying to suck back from the people what it ,lost ! and yes the whole world is paying for it too ! esp great britain and europe who closed the doors on the loehman brothers
when it collapsed the housing market. tTHATS WHY GAS IS SO HIGH !

Is it true that only “demand /supply” is the main factor? Is the conflict with Iran true or just a make-up to increase the greed logically under all economy aspects as defined by economist? Ipod is a hot procduct… The price is never to high as demand indicates! The question is WHEN will it stop climbing? Forever?